Why do firms grant free credit? Would it be more efficient if all sales were for cash
Question:
Why do firms grant “free” credit? Would it be more efficient if all sales were for cash and late payers were charged interest?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 72% (22 reviews)
If the alternative is to literally pay cash on delivery it is clearl...View the full answer
Answered By
Anirban Dey
After masters in physics, I did research for several years, my field of interest lies mainly in the area of quantum mechanics in a broader perspective. Spending several years in research helped me to write scientific papers and also encouraged me to understand about developing and going deeper for a certain topic and subject. In those days I also gave tuition to high school students of grade 11-12 and also to undergraduate students in physics and mathematics, teaching was fun as well as a responsible job which I enjoyed a lot. I tried my level best to ensure the best way to make students understand certain topic from basic to more complex situation with both mathematical and theoretical arguments which on the other hand helped me to clarify my visionary of each topic I taught them.
0.00
0 Reviews
10+ Question Solved
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Question Posted:
Students also viewed these Corporate Finance questions
-
Would it be more efficient to enable employees to vote on decisions with majority rule or to assign the CEO full responsibility for decisions? Explain.
-
Why would it be more efficient to use labeled anti-human IgG rather than label the patient's antibodies?
-
Would it be more likely to find this type of hazardous waste landfill in the United States or Russia? Why?
-
Subsequent Events and Subsequently Discovered Facts. Michael Ewing is auditing the financial statements of Dallas Company for the year ended December 31, 2014. In concluding the process of gathering...
-
What occurs when the outer electrons that buzz about the atomic nucleus encounter electromagnetic waves?
-
How does physical distribution differ from channels of distribution?
-
Use examples from your state and local governments to discuss the need and scope of financial condition analysis.
-
Jana Crebs is a contractor for the construction of large office buildings. At the beginning of 2011, three buildings were in progress. The following data describe the status of these buildings at the...
-
Net income Depreciation expense Accounts receivable increase (decrease) Inventory Increase (decrease) Accounts payable increase (decrease) Accrued liabilities increase (decrease) TWEX $ 7,800 58,600...
-
Potholes All along the sides of Route 10, residents displayed signs saying: "County Executive: Fix this Road!" Wanting to minimize the negative publicity associated with this sign campaign, the...
-
How should your willingness to grant credit be affected by differences in (a) The profit margin, (b) The interest rate, (c) The probability of repeat orders? In each case illustrate your answer with...
-
Sometimes a firm sells its receivables at a discount to a wholly owned captive finance company. This captive finance company is partly financed by the parent, but it also issues substantial amounts...
-
In what ways are the problems of creative accounting being tackled at present?
-
Based on the following information, calculate the sustainable growth rate for Kaleb's Welding Supply: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends 7.5% 0.65 0.60...
-
Waterway Inc. uses LIFO inventory costing. At January 1, 2025, inventory was $216,014 at both cost and market value. At December 31, 2025, the inventory was $283,252 at cost and $262,660 at market...
-
What is the 32-bit version of: 0000 0000 0001 0101
-
1. Let A = 2 1 4 3 Find AT, A-1, (A-1) and (AT)-1. 2. Let A = = [ -1 -1 2 22 (a) Find (AB), BT AT and AT BT. (b) (AB)-1, B-1A-1 and A-B-1. ] 1-5 and B = 1
-
Xavier Ltd. paid out cash dividends at the end of each year as follows: Year Dividend Paid 2018 $250,000 2019 $325,000 2020 $400,000 Assume that Xavier had 100,000 common shares and 5,000, $4,...
-
Cost allocation to divisions. Rembrandt Hotel and Casino is situated in Ontario. The com plex includes a 300-room hotel, a casino, and a restaurant. As Rembrandts new controller, you are asked to...
-
Information graphics, also called infographics, are wildly popular, especially in online environments. Why do you think infographics continue to receive so much attention? How could infographics be...
-
Calculate the equilibrium constant for the reaction between Fe 2+ (aq) and Zn(s) (at 25 C).
-
If company Z (see Problem 5) were to distribute all its earnings, it could maintain a level dividend stream of $15 a share. How much is the market actually paying per share for growth opportunities?...
-
1. Help Jenny to forecast dividend payments for Reeby Sports and to estimate the value of the stock. You do not need to provide a single figure. For example, you may wish to calculate two figures,...
-
You have the chance to participate in a project that produces the following cash flows: The internal rate of return is 13%. If the opportunity cost of capital is 10%, would you accept the offer? Cash...
-
Accounting changes fall into one of three categories. Identify and explain these categories and give an example of each one.
-
Machinery is purchased on May 15, 2015 for $120,000 with a $10,000 salvage value and a five year life. The half year convention is followed. What method of depreciation will give the highest amount...
-
Flint Corporation was organized on January 1, 2020. It is authorized to issue 14,000 shares of 8%, $100 par value preferred stock, and 514,000 shares of no-par common stock with a stated value of $2...
Study smarter with the SolutionInn App